EPA OKs higher ethanol levels in gas, industry responds

10.13.2010

WASHINGTON — On Oct 13, the Environmental Protection Agency announced it had approved blending higher concentrations of ethanol into gasoline for newer vehicles, allowing mixtures with up to 15% ethanol at the pump, according to The Associated Press. The current maximum blend is 10%. EPA said the higher blend would be approved for vehicles manufactured since 2007.

Although the move is politically popular in rural farm areas, ethanol mandates face strong opposition from cattle ranchers, the auto industry, environmental advocators, food companies and a broad coalition of other groups.

A Congressional mandate for increased ethanol use cannot be achieved without allowing higher blends, EPA has said. Congress has required refiners to blend 36 billion gallons of biofuels, mostly ethanol, into auto fuel by 2022.

Meanwhile, a coalition of farm and food industry trade associations representing various segments in the food-production chain issued a statement in response to the EPA’s announcement. Members of the Coalition include the American Meat Institute, the Grocery Manufacturers Association, the National Council of Chain Restaurants, the National Chicken Council, the American Frozen Food Institute, the American Bakers Association, the National Meat Association and the National Turkey Federation.

“E15, which would be a 50% increase from the currently permitted level of 10% ethanol in gasoline, will result in dramatic increases in the portion of the US corn crop used to make fuel rather than food and, when fully implemented, could result in more than 40% of the nation’s corn crop being diverted to ethanol production. The corn ethanol industry has received over $30 billion in federal subsidies over the last three decades,” the statement said.

The farm and food industry groups noted EPA’s decision is certain to accelerate the recent dramatic rise in corn prices, and questioned whether the EPA decision is legally sound.

“The EPA’s decision will have an impact on American farmers, food manufacturers and, most importantly, American consumers, who will face price increases at the grocery store and when they go out to eat in a restaurant,” the coalition’s statement said. “EPA took this step without sufficient regard for the inevitable effect on the price of food and feed.”

“USDA's recent estimate that corn production for this year was going to be 3.4% less than 2009 has sent corn prices higher,” said American Meat Institute President and CEO J. Patrick Boyle. “This will put pressure on the meat and poultry supply which will lead to higher food prices for consumers. For those consumers worried about climbing food prices, this decision will increase the amount of corn being diverted to our gas tanks and away from meat and poultry production. It’s unfortunate that EPA acted hastily and approved the use of E15, and now the American consumer will pay for it at the grocery store.”

National Chicken Council President George Watts said: “Rising grain prices driven by the voracious demand for feedstock from the heavily subsidized ethanol industry caused an increase of six percent in the retail price of fresh whole broiler chickens from 2008 to 2010. Channeling even more corn into ethanol will, in time, only drive up the cost of chicken even more. Consumers will end up paying for the ethanol industry’s demands. It is time to put an end to government mandates and interference in the market that raise the price of corn.”

“EPA’s action regarding the E15 waiver barely puts a band-aid on the oil dependency it is intended to alleviate, yet negatively impacts food security by further raising food and feed prices,” added National Meat Association CEO Barry Carpenter. “Higher feed prices will eventually be passed on to consumers in higher meat and poultry prices. This is not a good decision for either consumers or US agriculture.”

National Turkey Federation President Joel Brandenberger concluded by saying: “Feed accounts for 70% of the total cost of raising a turkey, and corn is the single-largest ingredient in turkey feed. The spike in corn prices caused by the expansion of corn-based ethanol could be crippling at a time when the turkey industry is just starting to recover.”